In light of the global economic crisis and the imposition of stricter regulations, many companies worldwide are facing significant challenges. In response, numerous entities have considered liquidation to address financial instability and ensure compliance. This convergence of economic and regulatory pressures has prompted a careful re-evaluation of strategic direction, often leading to the initiation of liquidation proceedings to navigate these complexities thoughtfully and effectively.

According to the articles of association of each company and the Cyprus Companies Law, Cap.113 as amended, the members of a solvent company may, by special resolution with a majority of at least 75% of the members present and entitled to vote, resolve to wind up the company. 

The majority of the directors of the company must swear under oath to the solvency of the company and its ability to settle its debts and liabilities, as applicable, within 12 (twelve) months from the commencement of the liquidation procedure. This declaration of solvency must be accompanied by a statement of assets and liabilities. Subsequently, an extraordinary general meeting is convened by the company’s members to consider the solvency declaration and decide on entering liquidation proceedings and appointing a liquidator. 

The winding up is deemed to commence on the date of passing the special resolution for this purpose. As per legislation, a licensed insolvency practitioner must be appointed as the liquidator to settle the company’s affairs and distribute its assets.

Once appointed, the liquidator assumes responsibility for ceasing the company’s activities, managing its affairs and administration, and taking control of its property to distribute among creditors according to legal priority, with any surplus being distributed to the members.

Upon the liquidator’s appointment, all powers of the board of directors cease, as they are vested in the liquidator, unless the liquidator approves the exercise of any powers by the directors. During the liquidation process, the liquidator arranges for the settlement of the company’s affairs and convenes final meetings by sending notices to the concerned parties.

During the winding-up, the company’s property will be allocated to equally satisfy all its obligations and, without prejudice to its allocation, it will be distributed between its members, in accordance with their rights and interests in the company. Company winding-up expenses take precedence over other claims.

Upon completion of all winding-up procedures, the liquidator convenes a final general meeting to present the final accounts, leading to the company’s dissolution. 

The company is considered as dissolved 3 (three) months after its final accounts and the report of the final meeting have been submitted to the Insolvency Department. 

Disclaimer

This information is intended as a general guide and should not be construed as legal advice. Should you require specific guidance or consultation regarding insolvency and restructuring matters, you may contact Mrs. Zena P. Antoniou, an experienced advocate and insolvency practitioner, at zena@antonioulegal.com